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Crisis at Common bar

With rates more than quadrupling, the NQ bar is almost out of business. Lynda Moyo investigates....

Written by . Published on August 6th 2009.

Crisis at Common bar

Earlier this month, Confidential received a letter from a very distressed Jonny Heyes. He's the co-owner of Common Bar in the Northern Quarter which, over the last 6-9 months has been backed into a financial cul-de-sac.

In September of last year, the bar's business rates were re-valued and increased from £10,750 to £55,000 per year.

In September of last year, the bar's business rates were re-valued and increased from £10,750 to £55,000 per year. For the owners, this meant a monthly bill of £2663 instead of the manageable £370 they were used to. But how did this dramatic rise come about?

Feedback from the Valuations Office Agency (VOA) reveals that Common was actually listed under the wrong category from the start:

'The property was used as a retail unit described as 'showroom and premises' until it was converted into a public house. Planning permission for a change of use from A1 to Café Bar was granted in November 2004. The Valuation Office Agency only became aware of the change in 2008 after being informed of this by the local authority. The effective date of the increase was taken as the date of the schedule, which was 15 September 2008.

Showrooms are valued on a price per square metre basis, whereas to work out the correct rateable value for public houses, the first and most important consideration is to determine the fair maintainable trade (FMT) of the property excluding VAT. This will be split between gross receipts for liquor, food, accommodation and other sales; and net receipts from gaming machines.'

For such a cost difference between the rates for a 'showroom' and a 'cafe bar' it's a wonder that the owners of Common didn't realise what they were signing up for when they decided to set up shop back in 2004. On top of this, and as the council point out, all details of valuation listings, including the rateable value and property description are available to businesses and the general public on the VOA website. So what went wrong on their part?

Heyes said: “We only lease it and we didn't think the original rates were particularly cheap when you put them in the context of the area back then. We were expecting it to be fairly cheap because essentially that was the appeal of the Northern Quarter. We're tucked away on a little back street and we've absolutely worked our arses off the five years, only for this to happen.”

Similarly with council tax, when business rates do rise there's not often much that can be done, and it's to that effect that Common have accepted the original valuation as being incorrect. It doesn't however, resolve the matter of how it is being dealt with, in their opinion. At the moment the much higher payments are due, Common's appeal date is still a way off, and meanwhile the owners refuse to spiral further into debt through what they feel is an unrealistic payment that the council is offering.

Heyes said: “We have of course been going through an appeals process, but in the mean time we could not maintain the level of rates payment we were being asked for, so we had to stop paying them. The two payments we did make were more than the entire rates bill for the previous year. It has now got to the point where we have had to employ a professional to arbitrate for us, something we can ill afford to do. The council is now forcing us to pay our rates plus any arrears, through threatened court action, which comes to nearly £4000. It gives us about 3-4 months before it puts us out of business with the loss of all jobs.”

City Centre, Lib Dem Councillor, Marc Ramsbottom has been supporting the case of Common bar but admits it's a difficult scenario.

He said: “Part of the problem is that the council doesn't set the valuation; it's an independent quango who take into account size and turnover. Common's owners said they notified the council some time ago that they were actually a bar not a showroom and the council must have therefore known and approved this. It seems they were just slow in dealing with it.

“From the council’s view point, they argue that it's not in the businesses interest to fall further into debt. However, what they could do is exercise even more discretion until the appeal. It's a pity that small businesses are being clobbered and there isn't more help and support in this time of financial crisis.”

But is the situation with Common really a common denominator amongst other small businesses, as Cllr Ramsbottom suggests? The VOA, will only comment that 'all public houses are valued on the agreed guide. The trading potential of these bars will guide the assessment of fair maintainable trade.' But Common suggest that overall, independent bars don't get a fair deal at all.

Heyes said: “Obviously this story is a personal one, but there are wider implications as to how the council operates on our behalf. There seems to be a fundamental lack of common sense and proportional application of policy by the council. The phrase 'a sledgehammer to crack a nut' often springs to mind. So many processes involving the council are so arcane and opaque the only workable option left is to enlist professional help to arbitrate on your behalf, a matter of little importance if you happen to be Tesco, but to small businesses such as ours a few thousand pounds does not come so easily.”

For now, Common want to be able to pay the rates they were used to until a new rate has been decided. They're confident that their rateable value will come down and sight the real problem as the period before the appeal date.

The council too, is sticking to their guns stating: “The council would advise the owners to continue with their payment plan. The company is currently in negotiations with the VOA regarding the appeal and the council will promptly deal with any outcome of this appeal process.”

It's a case of Common bar coming up against the rigid confinements of the council. Both are just trying to do their job, but an excess of red tape is preventing Common's plight being heard. The council state that Common have since paid the first installment of an extended payment plan, running from July 2009 until March 2010. If the rateable value is changed the council has also confirmed that they will update and adjust the account accordingly. However it still doesn't change the fact that in the meantime Common could fold under the financial pressure, and for the Northern Quarter the loss of such a distinctive bar is a high price to pay.

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38 comments so far, continue the conversation, write a comment.

EJAugust 6th 2009.

I would be so sad to see Common go, I really hope they get it sorted out satisfactorily. I've got visitors over from Canada tonight so may have to take them along in case it disappears before their next visit!

krockAugust 6th 2009.

bars and pubs are rated on there turnover not square footage, this is in effect a success tax!!, if comon was not as popular as it is its rates would be lower, this was brought in years ago by the big breweries who own masive pubs but are not busy.

AnonymousAugust 6th 2009.

sad story to read, particularly when big business on the other side of town, namely Urban Splash, has it's hand in the public till again, despite it turns out being partly owned by an offshore trust...naughty naughty

as muckAugust 6th 2009.

Good luck fella. I was in town today for the first time in a wee while, and the boarded up building seem to be becoming increasingly ubiquitous. Let's hope Common doesn't become the latest casualty.

smartiemcrAugust 6th 2009.

Of course business rates need to be fair, consistent and transparent, but some concessions must be made for small, entrepreneurial businesses. Whenever I go to Spain or Germany I am amazed at the number of unique, individual, sole trader businesses of all kinds. In most cases these are vastly superior in terms of product and service to the bland, corporate chains that are so ubiquitous in the UK. We are sadly no longer a nation of shopkeepers, we have followed America and become slaves to the corporate giants. Manchester City Council - take a stand, devise a meaningful policy to sustain small businesses and give favourable rates in certain parts of the city to small independent businesses with a lower turnover.

CasAugust 6th 2009.

Yes we are!

CasAugust 6th 2009.

If you don't care, don't comment.

jonnyAugust 6th 2009.

Hi Cas, just one final point, business rates is a tax linked to property, same as council tax. So the 55,000 figure relates to what they think this property is worth, extrapolated from our turnover not from our square footage as is the case for other businesses. So they think our property is worth £50 per sq foot pa, i think the rent on buckingham palace is less than that, let alone on a back street of manchester.

Practice What You PreachAugust 6th 2009.

...when practising what you preach doesnt happen I meant to say - getting caught up in my rant!

Practice What You PreachAugust 6th 2009.

Absolutely scandalous - I work in regeneration and if anybody would like sight of any document, produced by the council, that states things like 'we will support the development of independents in the NQ' then give e a shout. Indeed I have heard senior members speak about teh importance of the area for the creative / independent element of the city and see the City Centre Strategy, downloadable on the Council's website. Obviously independents are also used to market the city and it really annoys me when 'practicing what you preach' or the complete opposite happens. Didnt asimilar farce occur with night and day a year or two ago?

ChickAugust 6th 2009.

I'm a bit puzzled here. I am currently under-going a rates review as the footage of business premises was over-calculated first time round. I was informed that the ratable value is based on the rent paid and the square footage of the building, any floor at street level always being more expensive. I have never heard of turnover being a factor. £55k per year for a bar in the Northern Quarter is taking the piss

ADAugust 6th 2009.

Its very sad for fans of common and for the owners but it would be unfair for them to be paying a rate lower than their competitor bars. Its important that all businesses are teated fairly and it sounds like for the last four years commons competitors have not been treated fairly.

secret squirrelAugust 6th 2009.

Jonny...many years ago I went through a similar situation with a city centre music venue. I ended up paying monthly what the handling agents thought the appeal valuation would be (rather than the full assessment amount) and told the council to take me to court if that's what they really wanted to do. Despite lots of threats in the end the outstanding balance was about £400 extra and we didn't go to court. It did take about nine months to get the appeal done though. You have to really hassle your agent.

z..z..z..z....August 6th 2009.

Get a life Cas, or even better do some work. No one cares about your 100 comments a day on mancon, get a grip sweetheart!

east lancsAugust 6th 2009.

What Cas Said. Print a couple of posters; "Have your two penneth" with a joke about appreciating your punters' mandatory donation. People will understand. That said, there's plenty of venues in the NQ selling imported stuff. Good luck anyway John, we are all behind you despite what you might think.

rate mailAugust 6th 2009.

1) Business Rates are advertised as a payment for services. They are clearly another tax on business. (Demonstrated by the empty rates issues...but thats another point). Sucess and increased turnover = more rates + more tax + more wages etc. penalised all ways around. 2) A rateable value of £55,000 is very high. Comparably; Odd bar has an RV of £13,250Chinese Arts Centre: £5,200TV 21's £37,250Bay Horse £20,750Bluu has an RV of £80,0003) For other uses, (i.e. non leisure) you would expect a £55,000 rates bill to be associated with a very good spec office of c. 3.5 - 4,000 sq ft (big enough for 40 - 45 full time people 4) The bar has been given a rateable value of £55,000 - not a bill of £55,000. The current multiplier is 0.485 - i.e. a bill of £26,675 p.a. (Still - a lot!)5) It is an unfair policy of the system to allow mistakes to be made by the system, and build up - then expect a business to have no leaway in the massive sudden increase in payments. (They of course do this to avoid people dragging the appeal out then dissapearing) but it is still a fairly unfair way of recifying their mistake. You cant argue with paying the rates, but it is likely that the bar would have appealed this immediately in yr1 of trading than have the problem build to such an extent if the Valuation Office didnt make this error. I wouldnt rely on the council/Valuation Office agency working at breakneck speed to get this sorted. I would imagine quite a lengthy process is in store.

CasAugust 6th 2009.

Something doesn't quite add up about the amounts here!! £10,750 was obviously too low for a shop front premises, we pay more than that for our office - they must have known this! I assume a solicitor will have dealt with the lease and he will have told them. Does the 55k a year include a 'debt' the council say is owed because of underpayment, that seems more like it?! So if they had 4 years at 10k, when it should have been say 25k, then is it because the council are asking for the difference?

CasAugust 6th 2009.

It's not that price sensitive, otherwise they'd all be in wetherspoons. Your customers will pay an extra 3 pence a drink, especially as a lot will now know the struggle.

DidsburyGirlAugust 6th 2009.

This article makes me sad. I would be genuinely upset if Common got shut down, I've got a lot of memories in there. Its situations like this that will make our city one full of souless chain bars.

P DiddyAugust 6th 2009.

Really sad story - small but successfull independent businesses such as Common, which brings a bit of creativity and vitality into an area such as the NQ should be given much more help by this council. I'm talking generally - not just about this case.Obviously the initial rates were blatantly too low, which should have raised suspicions long ago - but at the end of the day, if that's what you're being invoiced by the council themselves you're going to take their word for it and continue to pay that amount. Does the 55k include backdated 'debts' related to this 'underpayment'? If it does, the council should write that element off - as it was their mistake. Don't penalise the business when it means effectively putting them out of business. Who benefits then?PS Mancon - it should be 'cite the real problem', not 'sight the real problem'. Come on.

AnonymousAugust 6th 2009.

I don't know whether Jonny agrees with me and it would be difficult to say but the minimum wage is a problem for these kind of businesses and smaller restaurants. And with all the fuss about tips and service charge having to go direct to the staff it creates very well paid bar tenders and waitresses - in some cases. The mw is £5.73, if you only get (and this is being mean) £3 an hour in tips then that's £8.73 an hour of which £3 isn't taxed. The bar men and waitresses are earning more than some of these small business owners who put their neck on the line. Just a thought.

kieranAugust 6th 2009.

Rates based on Turnover - who came up with this crazy system? Not being a bar owner and only being familiar with office rates I didn't realise that this was the case, and can't actually believe what I'm reading.Even if you don't run a business, anybody who watches Dragons Den, The Apprentice etc will have heard the phrase 'Turnover is vanity, profit is sanity' - a very true statement indeed. I've heard many a businessman brag about turning over huge amounts of money only to find out upon delving a little deeper that they aren't actually making any profit. When you have to pay other variable costs such as VAT and Corporation tax inline with perfomance on a what came in - what went out basis, it seems strange that rates would factor in the misleafing figure of turnover.

jonnyAugust 6th 2009.

I have no problem paying more rates for being a licensed premise, if indeed that was the reasoning behind it, but alas it's not, it's more arcane than that. I would be more than happy to pay 50% even 100% more if that was the justification, it's calculated differently because if you're a pub, renting your premise from a brewery, you don't pay a fair open market rent, which by the way we do, so they feel the need to find a different way of calculating it. As i said we do pay a open market rent, and any value in the business has been created by us, we didn't have the business passed on to us as a going concern so it is unfair to apply the calculation to us.

MancoAugust 6th 2009.

Manchester City Council lives by the rules it doesnt make the rules. Are we right in saying that Common is not the first bar that the owners have run. If so we believe that they were aware that their rates were too low and have enjoyed that benefit. Now it is pay back time. Ok one bar closes- another opens, In reality do the council care, no we don't , think so.

jumpersforgoalpostsAugust 6th 2009.

I'm not a genius or owt but bars like Common ARE the Northern Quarter. If it, and others like it, close surely less businesses and city dwellers will want to move in meaning less value and revenue for the council??.. Common has strong drinks,good beats,punches above it's weight on the ladies front and has friggin WIFI. It must stay open..

AnonymousAugust 6th 2009.

Business rates valuations and the rates paid are not set by the Council. It collects them. You can of course appeal against your valuation and their are specialist firms to assist at a price. Council tax valuations for residents are not set by the Council either but the rate of tax you pay is, the the Council does sue non payers.There is plenty of free guidance around for small business.

jonnyAugust 6th 2009.

It's important to note that licensed premises are the only businesses to be rated on their turnover to calculate their rates. I didn't want it to seem like we're just moaning about our rates, it's just why should we have to pay 5 times more than any other kind of business, we could be a software company turning over millions and we would pay less in rates. Fingers crossed we will be able to ride this out until the appeal is concluded at which time, again fingers crossed, the rates will come down, but there will be other businesses that won't be able to just because the council are so inflexible and don't seem to care about helping out small business.

CasAugust 6th 2009.

But as you said, that isn't how it's calculated for your premises. I'm not knocking you at all, you have a fine bar. However all the other NQ premises who are your competition have this problem as well. And for the article to say the rates had increased to 55k a year is very misleading! The montlhy rate the article says works out at around 32k, which again is misleading. The council should give you an indefinate amount of time to pay it all back though.

jonnyAugust 6th 2009.

Also cas, we weren't made aware by anyone that rates are calculated differently for licensed premises, considering we had to get planning and licensing to agree to us being a bar it's not like the council didn't know we were licensed. Also if we had the valuation on our initial revenue 5 years ago our rates bill would be a hell of a lot lower. Bearing in mind that our total sq footage is 1100, it is our rateable value that was calculated at £55,000 therefore our rates bill for the year would come to about £26/27,000 pa.

CasAugust 6th 2009.

Hi Jonny, I like Common, great bar but we all have to pay our bloody rates and we all think it's too much! I understand why licensed premises pay more, they and their customers use more of the services the council provides like police, health etc. That's how they justify it being more. You're right though the council do not help small businesses, don't get me started on them bloody orange bin bags!!!

AnonymousAugust 6th 2009.

Would be a travesty for this place to close. Independants are what makes the NQ what it is and should be encouraged and helped to thrive, not screwed for £55k a year. Without places like Common the NQ would be a derelict 'no go area' by now. The council needs to wise up.

ancoats girlAugust 6th 2009.

Business rates are ridiculous generally I think - how anyone can run an independant business and have much left over after rent & bills is a mystery to me (and probably explains the number of places that go out of business around the NQ, particularly the Urban Splash units in Smithfield.) I would be gutted if Common shut down - it's a great little place.

CasAugust 6th 2009.

Can you air an appeal for my business rates? Our rent and service charge are a bit hefty too!

jonnyAugust 6th 2009.

Fair enough some of the figures out but it is quite a complicated issue to explain, but the principal remains. and to pick up on your point AD our rates have been calculated to be a lot more than other comparable businesses, we are the smallest bar in the area and are, in some cases being asked to pay double the rates of other bars. Part of the problem is you are re-valued, then you have the chance to appeal but in the mean time, even if it is clear your rates will come down, you are asked to pay at the higher rate, this then becomes a massive strain on cash flow unnecessarily, you do get the money back after the appeal, but in some cases this may be too late for the business.

CasAugust 6th 2009.

So it's £26k a year then, that seems about right really. Never really on the council for anything!

CampaignforRealMathsonManConAugust 6th 2009.

Can you check your second paragraph again? According to you Common’s annual rates have increased from £10,750 to £55,000 – that’s just over 5 times – while monthly payments have increased from £370 to £2663 – that’s just over 7 times. Weird! Unless of course they’re being slowly, very slowly, charged for the accrued underpayment. But look again – even more weirdness - £370 per month is £4440 per annum and not £10K plus, while £2663 per month is £31956 per annum and not £55K. At £370 per month they were paying, if this figure is correct, about two and a half times the council tax on my apartment, so clearly rather too little for a bar. I sympathise with any business facing massive hikes in costs, particularly at the present time, but it’s difficult to know what to think when the figures presented don’t add-up, or in this case don’t multiply.

jonnyAugust 6th 2009.

last one i promise, east lancs, fair point, but if you recognise that 99% of the products we sell are imported, so due to the weak pound we have had 15% increase in costs already, on top of that factor in duty rises, increase in corporation tax, recession, there is only so much cost you can pass on to the customer in what is an incredibly price sensitive industry.

Jenna FrazerJuly 12th 2010.

Common is a rubbish bar devoid of feeling, staid, dull, lifeless and pretentious in the extreme: I thought I was in an Apple Mac showroom. Counted the i books (3) and two users dressed like an old heroin addicted friend of mine. Another had a hot water bottle which transpired to be an i pad bag (Apple hardware 4 and counting). My nachos had a big black hair in it. At £3.20 a pint of Becks Vier, they can afford a chef's hat. I only went because of Ralf Little. Never, ever, ever again: let it close. Hopefully something lively will rise from it's ashes.

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